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MongiIG

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  1. MongiIG
    What is automated trading?
    Automated trading is a method of participating in financial markets by using a programme that executes pre-set rules for entering and exiting trades. As the trader, you’ll combine thorough technical analysis with setting parameters for your positions, such as orders to open, trailing stops and guaranteed stops. Your trades are then managed from start to finish, meaning you could spend less time monitoring your positions.
    Auto trading enables you to carry out many trades in a small amount of time, with the added benefit of taking the emotion out of your trading decisions. That’s because all the rules of the trade are already built into the parameters you set. With some algorithms, you can even use your pre-determined strategies to follow trends and trade accordingly.

    How does automated trading work?
    First, you will choose a platform and set the parameters of your trading strategy. You’ll use your trading experience to create a set of rules and conditions, and then your custom algorithm will apply the criteria to place trades on your behalf. These factors are normally based on the timing of the trade, the price at which it should be opened and closed, and the quantity. For example, ‘buy 100 Apple shares when its 50-day moving average goes above the 200-day average’.
    The automated trading strategy that’s been set will constantly monitor financial market prices, and trades will automatically be executed if predetermined parameters are met. The aim is to execute trades faster and more efficiently, and to take advantage of specific, technical market events.
     
    What are the benefits of automated trading?
    With automated trading, you can:
    Fit your strategy around your schedule – execute trades automatically, day or night Reduce the impact of emotional and gut reactions with planned strategies Identify new opportunities and analyse trends with a wide range of indicators Execute multiple real-time trades simultaneously and remove manual execution  

    What platforms can you use for automated trading?
    The platform you’ll use for automated trading will depend on your trading preferences. At IG, we have several automated trading options available to our clients.
    ProRealTime
    Automate your trading with assisted creation tools, enabling you to build simple or advanced strategies without the need for coding. With ProRealTime, you get access to an advanced, yet easy-to-use, backtesting suite to test your system. The platform has over 100 indicators and has been optimised to suit new and experienced traders alike. Get it for free if you trade at least four times a month.
    MetaTrader4
    Customise your trading experience by building your own expert trading algorithms, creating indicators, and placing a range of orders. Plus, import Expert Advisors (EAs) to help you find opportunities according to your pre-defined parameters. EAs can either notify you of an opportunity or open a position automatically.
    APIs
    Build your own platform and create advanced trading solutions from scratch. This platform enables you to code your algorithms from the ground up. Orders are filled using market-leading IG technology, ensuring you get the best execution. You can view real-time and historical market prices, analyse market instruments and trader sentiment information, maintain watchlists and more.
     
    FAQs
    Is automated trading right for me?
    Automated trading might be right for you if you’re looking for a technique that helps you to trade according to predefined parameters. This can be especially helpful when trying to avoid emotional trading. Automated trading is a good solution for someone who wants a low maintenance trading strategy that relies on advanced technology.
     
    What automated trading systems could I use?
    IG offers a variety of automated trading systems for you to use, including ProRealTime, MetaTrader4 and APIs.
     
     
    You might be interested in…
    Algorithmic trading
    Deal with automated strategies powered by cutting-edge technology.
    ProRealTime
    Get integrated access to our leading web-based charting package.
  2. MongiIG
    AUD/USD Analysis & News
    Risk Trends Dictating Direction for FX Bearish on AUD Rallies
    RISK TRENDS DICTATING DIRECTION FOR FX
    A relatively tame session thus far across the FX space, which continues to lack notable direction. For currency markets, given that there is little to get excited about on the economic calendar, the focus will remain on risk sentiment for guidance. The Japanese Yen is on the back foot as we close out the week, with equities and yields finding a lift, although, 110.00 caps upside for now in USD/JPY. Looking at momentum across G10 (Figure 1), the Pound has outperformed in recent sessions, however, trends are still some way from being considered stretched (a reading >2), meanwhile, momentum across other major currencies are neutral.
     
    FX Momentum 20D Z-score

    Source: Refinitiv, DailyFX
    BEARISH ON AUD RALLIES
    AUD/USD: Modest recovery in the Aussie, however, 0.7400 remains a stumbling block for further upside. Eyes will be on the weekly close whereby a close above the figure puts 0.7450 in focus, which coincides with the descending trendline stemming from the May high and the 38.2% fib of this year's range. This is an area that I suspect the pair will struggle to break and thus stick to a bias of selling on rallies in AUD/USD. Risk sentiment will also be important for the pair and given that we are heading towards a typically soft window for equity markets, not just seasonally but also the recent trend of equities weakening into the weekly expiry option on the 3rd Friday of the month. A factor that does not bode well for AUD/USD.
    IG CLIENT SENTIMENT SIGNALS AUD/USD MAY SOON REVERSE LOWER
    Retail trader data shows 49.48% of traders are net-long with the ratio of traders short to long at 1.02 to 1. The number of traders net-long is 9.00% higher than yesterday and 7.44% higher from last week, while the number of traders net-short is 9.40% lower than yesterday and 6.78% lower from last week.
    We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests AUD/USD prices may continue to rise.
    Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current AUD/USD price trend may soon reverse lower despite the fact traders remain net-short.
    AUD/USD CHART: DAILY TIME FRAME

    Source: Refinitiv
     
    By Justin McQueen, Strategist, 10 September 2021. DailyFX
  3. MongiIG

    FOMC Event Risk: How Will the Market React?

    By MongiIG,


    Market News
    USD, Fed Price Analysis & News
    Markets on Tenterhooks Ahead of Fed Meeting All Eyes on the Dot Plot Again
    Markets on Tenterhooks Ahead of Fed Meeting
    Despite some overnight excitement with the latest actions in China regarding Evergrande. FX markets have been stuck in the usual pre-FOMC lull during the London session. As the time nears for the eventual Fed taper, market participants will be keeping a close eye on whether any explicit details are mentioned in tonight’s statement, while focus will also be on the latest dot plot projections.
    Dot Plots: The key market mover could be on the dot plot projections as the Fed provides a first look at the 2024 dot plot.
    Reminder that the dot plots released at the June meeting showed 7 members expect a Fed rate lift off in 2022. Therefore, three more members would need to move towards a hike to see a shift in the median dot-plot for 2022 rate hike. For 2023, there would need to be two members to shift in order to bring the median projection to three rate hikes. In which case, this would raise the risk of four hikes being shown in the 2024 dot plot. That said, this would be a very hawkish outlook relative to market expectations. Chair Powell would likely use the presser to downplay the significance of the dot plots, as he done on numerous times in the past where everyone had focused on the dot plots. But much like June, that didn’t stop the USD rallying over 2% in the subsequent few sessions.
    All Eyes on the Dot Plot Again

    China Risks Provide a Reason For Caution
    However, while in recent sessions playing the hawkish view might have had value, given that the USD is near the August highs, rising over 1% in the past week amid safe-haven demand and an increasing amount of market participants anticipating a hawkish meeting, the value has somewhat diminished.
    Keep in mind, that Chinese risks are at the forefront of investors’ minds and also in the minds of central bankers (as per RBA Debelle’s comments overnight). In turn, the rising uncertainty in China has prompted US equity markets to fall 5% from all time highs for the first time since October. Therefore, this does provide an excuse for Powell and Co. to stick to a relatively cautious stance where even the slightest of hints that a taper takes place in 2022 could be a enough to prompt a rally in risk appetite, which would also mean 2022 and 2023 dot plots left unchanged while 2024 dot plots see three rate hikes.
    The Fed put is a real thing, below is an abstract on the study regarding the Economics of the Fed Put.
    “Since the mid-1990s, negative stock returns comove with downgrades to the Fed’s growth expectations and predict policy accommodations. Textual analysis of FOMC documents reveals that policy makers pay attention to the stock market. The primary mechanism is their concern with the consumption wealth effect, with a secondary role for the market predicting the economy. We find little evidence of the Fed overreacting to the market in an ex post sense (reacting beyond the market’s effect on growth expectations). Although policy makers are aware that the Fed put could induce risk-taking, moral hazard considerations appear not to significantly affect their decision-making ex ante.”
     
    Scenario and FX Outperformer:
    Hawkish Dot Plots and Explicit Taper Signal: USD outperforms, particularly against low yielders (JPY, CHF & EUR) Cautious & More Dovish Than Expected: USD weakens most notably against CAD and AUD (currently has record shorts, according to CFTC data)  
    By Justin McQueen, Strategist, 22 September 2021. DailyFX
  4. MongiIG

    Pivot Point Strategies for Forex Traders

    By MongiIG,


    Analyst Piece
    A forex pivot point strategy could very well be a trader’s best friend as far as identifying levels to develop a bias, place stops and identify potential profit targets for a trade.
    Pivot points have been a go-to for traders for decades. The basis of pivot points is such that price will often move relative to a previous limit, and unless an outside force causes the price to do so, price should stop near a prior extreme. Pivot point trading strategies vary which makes it a versatile tool for forex traders.
    Keep reading to learn more about:
    Defining the pivot point How to calculate pivot points Using pivot points in forex trading Pivot point trading strategies Difference between pivot points and Fibonacci retracements WHAT IS A PIVOT POINT?
    A pivot point is a is a technical indicator used by forex traders as a price level gauge for potential future market movements. The pivot point indicator is used to determine trend bias as well as levels of support and resistance, which in turn can be used as profit targets, stop losses, entries and exits.
    Pivot point example:

    HOW TO CALCULATE PIVOT POINTS
    The calculation for the most basic flavor of pivot points, known as ‘floor-trader pivots,’ along with their support and resistance levels:
    Pivot point formula
    Pivot point (PP) = (High + Low + Close) / 3
    First resistance (R1) = (2 x PP) – Low
    First support (S1) = (2 x PP) – High
    Second resistance (R2) = PP + (High – Low)
    Second support (S2) = PP – (High – Low)
    Third resistance (R3) = High + 2 (PP – Low)
    Third support (S3) = Low – 2 (High – PP)
    There are other ways to calculate the pivot point, which is available on most trading platforms and can be extended through different time frames. The support and resistance levels will be calculated as above. Below is an example of what is offered on the IG trading platform for daily pivots. The same calculation can be made for weekly or monthly pivots too:

    How did the pivot point calculation come about?
    Up until recently, computers were not available on a mass scale. Therefore, market makers and floor traders needed a way of determining whether price was ‘cheap’ or ‘expensive’ on a relative basis. From a simple mathematical calculation, pivot points were born.
    Traders simply took the high, low, and closing price from the previous period and divided by three to find the ‘pivot.’ From this pivot, traders would then base their calculations for three support, and three resistance levels.

    HOW TO USE PIVOT POINTS IN FOREX TRADING
    Pivot points are used by forex traders in line with traditional support and resistance trading techniques. Price tends to respect these levels as they do with support and resistance. Pivot point price levels are recurrently tested which further substantiates these levels.
    Traders frequently use additional validation tools such as indicators, candlestick patterns, oscillators, fundamentals and price action to use in conjunction with the pivot to make trade decisions in the forex market.
    There are a few basic guidelines to follow when trading with pivot points:
    Price above pivot = bullish bias Price below pivot = bearish bias Longer period pivot points are more dependable due to increased data set Support and resistance levels are extensions of the pivot which can be used as supplementary key price levels PIVOT POINT TRADING STRATEGIES
    1. Pivot point swing trading
    For traders who prefer the medium to longer-term trades, swing trading with the pivot point is possible by using weekly/monthly time frames.
    The chart below depicts a weekly chart with the addition of the pivot point only (this can be edited by changing the pivot settings on the platform). It is clear there has been a trend reversal to the upside which is evident after the price breaks through the previous pivot resistance.
    Now acting as a support level, forex traders can place long entry orders at the pivot price. There is a false breakout (blue circle) but after this, there is substantial upside which could be exploited. The pivot levels won’t always contain the price, but it does offer a price level to maintain the directional bias. This would be a lengthier time horizon which would be ideal for swing traders.
    USD/ZAR weekly chart

    2. Pivot point breakout strategy
    Many traders attempt to focus their trading activity to the more volatile periods in the market when the potential for large moves may be elevated.
    Traders may attempt to look at breaks of each support or resistance level as an opportunity to enter a trade in a fast-moving market. This can be particularly relevant for longer-term pivot levels, with focus being paid to the weekly and monthly pivot points. The charts below will show how a trader can set up a pivot point breakout strategy using firstly the pivot alone as an indication as well as the more complex support and resistance levels.
    The chart below shows a pivot point with support and resistance levels excluded. In this example, the pivot indicator is based over a weekly period which provides traders with an extended data set for a more reliable key level. The pivot is used as a key price level, which was initially respected a few candles prior to the breakout. Once the breakout occurs, traders can then look to enter into a long trade as price above the pivot signals a bullish bias.
    USD/ZAR four-hour chart

    WHAT’S THE DIFFERENCE BETWEEN PIVOT POINTS AND FIBONACCI RETRACEMENTS/EXTENSIONS?
    Both pivot points and Fibonacci retracements/extensions present traders with hidden levels of support and resistance. However, there are some significant differences:
    PIVOT POINTS
    FIBONACCI RETRACEMENTS/EXTENSIONS
    Calculated as the average of the previous periods high, low and close
    Based on fixed ratios as a result of the Fibonacci sequence
    Based on previous period price extremes
    Based on previous waves price extreme
    FURTHER READING ON PIVOT POINTS
    Learn the basics of the classic pivot, with our guide to floor trader pivots. Get to grips with trading with support and resistance to build the groundwork for basic support and resistance practices. Use our hourly, daily, weekly and monthly pivot points to determine market sentiment in forex and other key assets.  
     
     
    Aug 31, 2022 | DailyFX
    Warren Venketas, Analyst
     
     
    - Reviewed by James Stanley, Nov. 24, 2021
  5. MongiIG

    Where now for the Nasdaq 100?

    By MongiIG,


    Market News
    Tech stocks have powered higher in recent months and the Nasdaq 100 now sits at a record high once more. Can this run continue?
    Source: Bloomberg   Indices Shares Nasdaq Nasdaq-100 Investor Stock  Chris Beauchamp | Chief Market Analyst, London | Publication date: Wednesday 11 August 2021. IG Back in the first half of 2021, there was no shortage of gloomy commentary about tech stocks. From being the market stars of the past year, it seemed tech had run out of room to rally.
    The expected reopening of the global economy was foretold to be the moment that investors would move away from the FANG winners of 2020 and find sectors and companies that would benefit from people leaving their homes and returning to physical shopping and working from offices, rather than working and shopping from the comfort of their homes.
    Perhaps unsurprisingly, this has not come to pass. Indeed, fund managers have rediscovered the attractions of the sector, with huge inflows over the recent weeks that has played a major part in driving the Nasdaq 100 to a new record high, taking out the 15,000 level for the first time in its history.
    For a time, it looked like big tech stocks like Amazon would continue to struggle. A stellar year in 2020 meant that stock prices of FANG names had risen very quickly, but from September onwards the relentless gains began to stall.
    Other sectors began to take over the mantle of leadership, and a rise in treasury yields seemed to suggest that the era of buying tech stocks had come to a close, given their valuations were so high that much of the risk appeared to be skewed to the downside.
    The Nasdaq 100 currently sits at a record high, having enjoyed huge gains since May. Sentiment surrounding this index and the heavyweight names such as Amazon has undergone a major shift over the past six months, as investors switched from growth to value and then back again.
    Source: ProRealTime  
    From a chart standpoint, the trend is firmly intact, and has been substantially revived since the uncertain February – May period. From May we have seen a renewed surge to the upside, as inflows have supported the sector and pushed it to a new record high.
    We have now gone an extended period without any major volatility, and historically August-September can see some weakness creep in before a year-end rally gets underway.
    But investors appear to have woken up to the strong fundamentals of the sector, particularly the cash-generation powers of the big FANG stocks, and have found renewed faith in growth stocks and their ability to deliver strong market returns.
  6. MongiIG
    US DOLLAR INDEX EYEING RESISTANCE AHEAD OF CPI REPORT DUE
    US Dollar price action trading on its front foot largely due to the threat of Fed tapering EUR/USD weakness, USD/JPY strength driving the DXY Index 1% higher month-to-date Upcoming CPI data likely to weigh on the FOMC’s transitory narrative and fuel volatility Check out our Real Time News page for breaking market news and analyst insights
     
    US Dollar bulls have clearly controlled the steering wheel over the last few days. The broader DXY Index is up more than 1% on the month largely thanks to US Dollar strength against key peers like the Euro and Yen. In fact, EUR/USD and USD/JPY, which are the two largest components of the DXY Index, have both reflected US Dollar gains for seven consecutive trading sessions.
    Whether or not the US Dollar can sustain its bid in the short-term hinges largely on inflation data on deck for release. The monthly US CPI report is scheduled to cross wires Wednesday, 11 August at 12:30 GMT. Markets are expecting the latest year-over-year inflation data to come in at 5.3% and 4.3% for headline and core CPI, respectively. Of particular note, however, will be the month-over-month readings.
    DXY INDEX – US DOLLAR PRICE CHART: WEEKLY TIME FRAME (NOV 2019 TO AUG 2021)

    Chart by @RichDvorakFX created using TradingView
    This is considering the market forecast is for both headline and core inflation to decelerate quite a bit on a month-over-month basis. Specifically, the consensus estimate is for headline CPI to drop to 0.5% in July from 0.9% in June and core CPI to fall to 0.4% in July from 0.9% in June. That would likely bode well for FOMC officials and their transitory inflation narrative.
     
    As such, in-line or lower-than-expected CPI data could see a bearish reaction by the US Dollar. On the other hand, if the CPI report comes in hotter than expected, that would likely keep the pressure on the Fed to announce its taper timeline sooner rather than later, and we could see the US Dollar extend its stretch of strength in turn.
    USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILTIY TRADING RANGES (OVERNIGHT)

    High-impact CPI data due and its make-or-break potential for US Dollar outlook is underscored by the latest overnight implied volatility readings. EUR/USD overnight implied volatility of 7.1%, for example, compares to its 20-day average reading of 5.2% and ranks in the top 78th percentile of measurements taken over the last 12-months.

    Likewise, USD/JPY overnight implied volatility of 6.8% compares to its 20-day average reading of 5.3% and ranks in the top 88th percentile of measurements taken over the last 12-months. That all said, traders might want to keep an eye on how Treasury yields react to the upcoming inflation report given their collective posturing as a bellwether to where the US Dollar heads next.
    Written by Rich Dvorak, Analyst for DailyFX.com. 11th August 2021.
  7. MongiIG
    FTSE 100 PRICE, NEWS AND ANALYSIS:
    Several factors are lifting stock markets near term, including hopes that an agreement on the US debt ceiling is close, Putin’s offer to stabilize the world energy markets and a potential meeting of Xi and Biden. However, worries about China persist, and this rally may just reflect some short-covering and dip-buying before stock markets head lower again.
     
    FTSE 100 RALLY MAY NOT LAST LONG
    World stock markets, including London’s, are benefiting from a more helpful news flow. First up, US Democrats have signaled that they will take up Senate Republican leader Mitch McConnell’s offer to raise the US debt ceiling, reducing the admittedly highly unlikely risk of a US default on its debts.
    Second, Russian President Vladimir Putin has offered to stabilize global energy markets, hinting that the State-backed Gazprom could increase supplies to help Europe. Third, US President Joe Biden and Chinese President Xi Jinping have reportedly agreed to hold a virtual summit that could reduce the tensions between the two countries. And fourth, the European Central Bank is reported to be considering a new bond-buying program to stabilize markets after its pandemic emergency purchase program (PEPP) ends in March.
    That has all combined to weaken the oil and natural gas markets but strengthened global stock market indexes, including London’s FTSE 100.
    FTSE 100 PRICE CHART, ONE-HOUR TIMEFRAME (SEPTEMBER 30 – OCTOBER 7, 2021)

    Source: IG (You can click on it for a larger image)
    MARKET WORRIES PERSIST
    Note, though, that the small advance that began mid-Wednesday could easily reverse. China’s troubled power and property sectors remain a background concern, and the latest rally may just represent some dip-buying and short-covering that will soon be over.
    Friday’s US labor-market report is another potential hurdle. Economists polled by the news agencies expect non-farm payrolls to have risen by a hefty 500,000 in September, up from 235,000, and a good figure could prompt the Federal Reserve to taper monetary stimulus as early as next month… a move that would likely damage market confidence.
    BEARISH FTSE SIGNAL FROM SENTIMENT DATA
    As for retail trader positioning, IG client sentiment data show 69.10% of traders are net-long the FTSE 100, with the ratio of traders long to short at 2.24 to 1. The number of traders net-long is 12.58% higher than yesterday and 13.64% higher than last week, while the number of traders net-short is 14.30% lower than yesterday and 27.11% lower than last week.
    Here at DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests FTSE 100 prices may weaken. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger FTSE 100-bearish contrarian trading bias.
    Written by Martin Essex, Analyst, 7th October 2021. DailyFX
  8. MongiIG

    The Week Ahead On The Markets

    By MongiIG,


    Market News
    The Week Ahead
    Read about upcoming market-moving events and plan your trading week
                                                Week commencing 22 November
    Chris Beauchamp’s insight
    Flash PMIs from around the globe dominate the week in terms of economic data, along with US durable goods orders and the German IFO index. The second half of the week is likely to be quieter thanks to the US Thanksgiving holiday. Key corporate names to watch this week include Zoom, HP and Gap in the US, and Compass and AO World in the UK.
      Economic reports
    Weekly view Monday
    1.30pm – US Chicago Fed index (October): index to rise to 0.1. Markets to watch: US indices, USD crosses
    3pm – US existing home sales (October): sales rose 7% MoM in September. Markets to watch: USD crosses
     
    Tuesday
    8.15am – 9am – French, German, eurozone PMIs (November, flash): German mfg PMI to fall to 56.9. Markets to watch: EUR crosses
    9.30am – UK PMIs (November, flash): services PMI to fall to 57.8 and mfg PMI to drop to 56.9. Markets to watch: GBP crosses
    2.45pm – US PMIs (November, flash): mfg PMI to fall to 57.2 and services PMI to fall to 58.2. Markets to watch: USD crosses
     
    Wednesday
    9am – German IFO index (November): business climate index to fall to 96.5. Markets to watch: EUR crosses
    1.30pm – US durable goods orders (October), initial jobless claims (w/e 20 November): orders to rise 0.2% MoM overall, and 0.4% excluding transportation orders. Claims to fall to 264K. Markets to watch: US indices, USD crosses
    3pm – US new home sales (October): sales rose 14% in September. Markets to watch: USD crosses
    3.30pm – US EIA crude oil inventories (w/e 19 November): stockpiles fell by 2.1 million barrels in the previous week. Markets to watch: Brent, WTI
    7pm – US FOMC minutes: these will shed light on the discussions at the last meeting, at which the decision to taper asset purchases was taken. Markets to watch: US indices, USD crosses
     
    Thursday
    Thanksgiving – US markets closed
    7am – German GfK consumer confidence (December): index to rise to 2. Markets to watch: EUR crosses
     
    Friday
    None (half day for US markets)
     
      Company announcements
     
    Monday
    22 November
    Tuesday
    23 November
    Wednesday
    24 November
    Thursday
    25 November
    Friday
    26 November
    Full-year earnings  
    Carr's,
    Diploma  
    Compass Britvic,
    Brewin Dolphin,
    Virgin Money  
        Half/ Quarterly earnings  
    Zoom,
    Urban Outfitters  
    Severn Trent,
    Cranswick,
    Pets at Home,
    AO World,
    Telecom Plus,
    HP,
    Gap,
    Dollar Tree,
    Best Buy,
    Dell  
    De La Rue,
    United Utilities  
    Mulberry   Trading update  
      Crest Nicholson        
      Dividends
    FTSE 100: Vodafone, Imperial Brands, Land Securities, British Land
    FTSE 250: Diversified Energy Company, Tate & Lyle, Electrocomponents, 3i Infrastructure, Kainos, CMC Markets, HICL Infrastructure
    Dividends are applied after the close of the previous day’s session for each market. So, for example, the FTSE 100 goes ex-dividend on a Thursday, but the adjustment is applied at the close of the previous day, e.g. Wednesday. The table below shows the days in which the adjustment is applied, not the ex-dividend days.
     
    Index adjustments
     
    Monday
    22 November Tuesday
    23 November Wednesday
    24 November Thursday
    25 November Friday
    26 November Monday
    29 November FTSE 100    
    6.13     0.4 Australia 200 0.5 0.1         Wall Street         4.6 11.9 US 500 0.06 0.20   0.11 0.38 0.60 Nasdaq 0.07 0.74     0.22 0.19 Netherlands 25             EU Stocks 50           1.1 China H-Shares           0.1 Singapore Blue Chip             Hong Kong HS50     4.5       South Africa 40             Italy 40             Japan 225      
  9. MongiIG
    Reviewed by Nick Cawley on December 23, 2021
    Traders with a strong understanding of technical indicators are usually better equipped to navigate the financial markets than those that lack this knowledge. While personal investing goals, risk appetite and trading style will help to determine a strategy and trading plan, knowing what technical indicators to use in your approach can help to determine possible entry and exit points.
    Hundreds of technical indicators exist, and clear signals can be identified using effective indicators as part of a strategy. This article will cover six of the most popular technical indicators for stock trading.
    BEST TECHNICAL INDICATORS FOR STOCK TRADING
    For traders looking for the most effective technical indicators, it is important to consider the objectives of the trading strategy as well as the current market condition. For individuals trading individual stocks, it is often beneficial to apply indicators to the stock index in which that share belongs to get a holistic view of the larger market as a whole.
    Below are six of the most popular technical indicators to use when analyzing stocks:
    INDICATOR NAME
    TYPE OF INDICATOR
    CHARACTERISTICS
    Client Sentiment
    Contrarian Indicator
    Shows client positioning of the market Indicates when markets are nearing extremes Leading indicator Useful in trending markets Relative Strength Index (RSI)
    Momentum Oscillator
    Plotted between 0 – 100 Indicates when the market is overbought or oversold Leading indicator Useful in trending markets Stochastic
    Momentum Oscillator
    Plotted between 0 – 100 Consists of two lines, %K and %D line Indicates when the market is overbought or oversold Leading indicator Useful in rangebound markets Simple Moving Average (SMA)
    Trend following indicator
    The SMA represents the average price of a security over a specified period of time Equal weighting is given to all points in the data set Used to confirm the direction of the current trend Lagging indicator Useful in trending markets Exponential Moving Average (EMA)
    Trend following indicator
    The EMA represents the average price of a security over a specified period of time with a greater emphasis on recent prices Higher weighting is given to recent points in the data set Lagging indicator Useful in trending markets Moving Average Convergence Divergence (MACD)
    Momentum oscillator
    The MACD measures both momentum and the trend Overbought and oversold signals occur above and below the zero-line Lagging indicator Useful in trending markets CLIENT SENTIMENT
    Client sentiment data is derived from a brokerage’s execution desk data, measuring live retail client trades to determine possible directional biases in the market. When sentiment is approaching extreme levels, stock traders may begin to see a reversal as more likely which is why it is seen as both a contrarian indicator as well as potentially having a leading component.
    Below is an example of the IG Client Sentiment Index, IG’s sentiment gauge derived from execution desk data, for the Dow Jones index (Ticker: Wall Street). Based on the data below, 64% of traders have short positions which means that majority of traders expect the price of Wall Street to drop. However, sentiment is seen to be bullish, meaning that based on this data the price of Wall Street may be expected to increase. Although it is not advisable to trade-off sentiment (or any individual indicator) alone, an individual who is trading a constituent of the DJIA could use this data as an informative tool before applying additional indicators.

    DailyFX provides client sentiment data which isderived from live IG retail client trades for forex, commodities, cryptocurrencies and major stock indices. Stock sentiment analysis is also available for individual shares on the IG platform where applicable or available.
      RELATIVE STRENGTH INDEX (RSI)
    The relative strength index (RSI) is a momentum oscillator that measures the magnitude of price movements to determine whether a market is overbought or oversold. A market is seen to be oversold when the RSI is below 30 and is overbought when the RSI is above 70. These are key levels could indicate a potential reversal, classifying the RSI as a leading indicator.
    The chart below shows the RSI being applied to the daily chart for Uber Technologies (Ticker: UBER). The RSI trades between 30 and 70 for some time before falling below the 30 level. Below the 30 level, the first signal is a false signal because although it looks like the trend is going to reverse to the upside, the price continues to fall. However, the second signal is present when the RSI is below 30 and turns towards the upside. However, the RSI only confirms the reversal by crossing above the 30 line the next day.

    STOCHASTIC
    The stochastic oscillator is another momentum indicator which is used to determine overbought and oversold conditions when trading stocks. Unlike the RSI which measures the speed of price movements, the stochastic measures current price in relation to its price range over a period of time.
    The %K line (the black line) is calculated by using the latest closing price relative to the lowest low and highest high over a specified period of time and the %D line represents the simple moving average of the %K (three period Simple Moving Average is the most common).With stochastics, a bullish crossover occurs when the %K line (the black line) crosses over and above the %D line (the red dotted line). Likewise, a bearish signal occurs when the %K line crosses under and below the %D line. The strongest signals will often occur when there is a bullish cross-coupled with a move above 20 from below and a bearish signal coupled with a move below 80.
    In the image below, the stochastic indicator is applied to the S&P 500 price chart (Ticker: US 500). As indicated on the chart, a bearish crossover occurs from above the 80 line, indicating that the trend may reverse to the downside. The reversal is then confirmed once the lines cross 80. Likewise, the bullish crossover occurs below 20 and the reversal is confirmed once the 20 line is crossed.

    SIMPLEMOVING AVERAGE (SMA)
    A simple moving average (SMA) is a lagging indicator which represents the average price of a security over a specified period of time. In a trending market, the moving average modulates short-term price fluctuations and allows stock traders to identify the trend in a simplistic way.
    As depicted in the chart below, in a rangebound market, it is also possible to use a moving average to identify support and resistance levels. By applying the 50 day MA to the Boeing price chart, it is clear that the 50-day SMA can also be seen as potential support even as Boeing is trading in a ranging environment.

    EXPONENTIAL MOVING AVERAGE (EMA)
    As with the SMA discussed above, the exponential moving average (EMA) is a lagging indicator which represents the average price of a security over a specified period of time. However, unlike the SMA which gives equal weighting to all data points in the series, the EMA gives more weight to recent prices, removing some of the lag found with a traditional SMA. This makes the EMA an optimal candidate for trend trading as it allows traders to get a holistic view of the market without missing out on opportunities with may be due to the lag of a simple moving average.
    MACD
    The MACD (moving average convergence/divergence) is a technical indicator that can be used to measure both momentum and the strength of the trend. The MACD displays a MACD line (blue), signal line (red) and a histogram (green) which shows the difference between the MACD line and the signal line.
    The MACD line is the difference between two exponential moving averages (the 12 and 26 period moving averages using common default settings), whilst the signal line is generally a 9-period exponentially average of the MACD line. These lines waver in and around the zero line, giving the MACD the characteristics of an oscillator with overbought and oversold signals occurring above and below the zero-line respectively.
    With reference to the chart below, featuring Apple, Inc. (Ticker: AAPL):
    A bullish signal is present when the MACD line crosses ABOVE the signal line from BELOW the zero line. A bearish signal is present when the MACD line crosses BELOW the signal line from ABOVE the zero line.
    TECHNICAL INDICATORS FAQ’S
    What is the difference between a leading and a lagging indicator?
    Although leading and lagging indicators are both derived from historic price data, a leading indicator is used to indicate expected price movements in the market while lagging indicators are used to provide entry and exit signals once the trend has been identified.
    Although similarities and differences exist between the two, both are equally important and it is often beneficial for traders to use both leading and lagging indicators simultaneously.
    FURTHER READING ON STOCK TRADING
    Learn how to apply stock market sentiment analysis Explore the differences between stock trading and investing Bookmark our guide to stock market trading hours  
    Dec 29, 2021 |  Tammy Da Costa, Analyst. DailyFX
  10. MongiIG

    Best FTSE 250 shares to buy in October 2022

    By MongiIG,


    Market News
    Britvic, Greencoat UK Wind, Greggs, and Watches of Switzerland are four FTSE 250 shares to watch next month as UK markets recalibrate.
    Source: Bloomberg   United Kingdom Sugary drink tax Recession Inflation Dividend Renewable energy  Charles Archer | Financial Writer, London | Publication date: Friday 30 September 2022  The UK economic situation is looking precarious. And the uncosted ‘mini-budget,’ tanking pound, pension panic, and widespread economic criticism could yet have further repercussions.
    Given this, more rapid and unpredictable market movements appear likely to be in the offing.
    Accordingly, many of the best FTSE 250 stocks to watch could soon be struggling through turbulent waters, despite the cancelled corporation tax cut.
    However, the new governing administration could soon be providing some advantages to a select few companies, which might translate into higher share prices. And domestically focussed FTSE 250 companies are more likely to be the beneficiaries than those that constitute its older brother, the FTSE 100.
    Best FTSE 250 shares
    1) Britvic (LON: BVIC)
    Down 24% to 720p year-to-date, Britvic shares could be a FTSE 250 buying opportunity on the dip.
    Unlike premium stocks such as Coca-Cola or FeverTree, which trade at substantially higher price-to-earnings ratios, Britvic offers the likes of Tango, Robinsons, and J2Os, which are potentially more affordable options in this recessionary environment.
    With a £1.9 billion market cap, it’s a comparative minnow. But in Q3 2022 results, it saw revenue increase by 11.2% year-over-year to £431.1 million, with ‘volume growth and positive price/mix.’ Accordingly, it’s running a £75 million share buyback programme that should conclude by May 2023.
    The most exciting shake-up for Britvic could come from the potential scrapping of the ‘sugar tax’ — officially the ‘Soft Drinks Industry Levy — which imposes an 18p per litre tax on sugary drinks containing between five to eight grams of sugar per 100ml, or 24p per litre for those exceeding eight grams.
    Two-thirds of Britvic’s revenue is UK-based and this could seriously boost profit margins at a time of flagging consumer spending.
    Key risk: Carbon dioxide, which is manufactured in only two plants in the UK, has rocketed nearly tenfold to £2,800 per metric tonne. Further increases could more than offset the lifting of the sugar tax.
    2) Greencoat UK Wind (LON: UKW)
    Greencoat UK Wind is a FTSE 250 green energy infrastructure fund, which invests in both onshore and offshore UK wind farms to generate revenue for investors. It aims to offer a sustainable and above-average dividend yield, which increases in line with inflation while preserving capital in real terms.
    This is an attractive quality in a high inflation, recessionary environment. So too is its 149p share price, up 15% over the past year. It trades on an exceptionally attractive price-to-earnings ratio of just 4, and now boasts a solid 5% dividend yield.
    The fund currently invests in over 40 wind farms with a net generating capacity of 1,442 MW. Chancellor Kwarteng has in the past made clear that he holds favourable views of investment in renewable sources like wind, an important factor as the UK seeks energy independence. Already new renewables funding is in place, as are plans to relax onshore wind planning rules.
    Key risk: Any change in the political winds could see Greencoat UK Wind either directly or indirectly in line for a windfall tax.
    Source: Bloomberg 3) Greggs (LON: GRG)
    Down 50% year-to-date to 1,688p, Greggs shares are part of a hallowed group of the key UK stocks used as an unofficial barometer to help assess the state of the economy, with others on the list including Tesco and JD Wetherspoon.
    Of course, it’s no secret that the economy has suffered in 2022. But the company could actually benefit from the recession. As the loss of remote workers becomes factored in, it could benefit from cash-strapped consumers looking for reliably affordable food.
    CEO Roisin Currie argues that ‘in a market where consumer incomes are under pressure Greggs offers exceptional value for customers looking for food and drink on-the-go. We are well positioned to navigate the widely publicised challenges affecting the economy.’
    In recent half-year results, total sales rose by 27.1% year-over-year to £694.5 million, with the FTSE 250 company boasting a ‘strong cash position and good liquidity, with net cash at period end of £145.7m, having paid a special dividend of 40p per share (£40.6m total) in April 2022.’
    While it only saw pre-tax profit at a flat £55.8 million due to the re-introduction of business rates, increase in VAT, and higher levels of cost inflation, it opened 58 net shops, and anticipates opening a total of 150 more in 2022. It now operates 2,239 shops across the UK.
    Key risk: Further stock price pressure as investors and consumers alike fret over the length and depth of the UK recession.
    4) Watches of Switzerland (LON: WOSG)
    Watches of Switzerland shares are down 57% year-to-date to just 654p. The luxury company, which still derives around 87% of sales from the luxury watches sold in its 170 stores worldwide, is arguably a casualty of the wider recessionary environment.
    In Q1 results, the FTSE 250 company saw currency-adjusted revenue rise by 25% year-over-year to £391 million. As CEO Brian Duffy argues ‘despite the well-publicised concerns about the macro-environment, demand for our products remains robust with client registration of interest lists continuing to extend...we remain confident in our long-range plan.’
    The company could benefit from the strengthening US dollar, as it derives around 40% of revenue in the US, and US-derived revenue rose by 76% in the quarter. It’s also expanding significantly into Europe, as part of a long-term growth strategy.
    Key risk: A recession strong, deep, and painful enough to hit the FTSE 250 company’s wealthy clientele so hard that they stay away.
    Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider.*
    Learn more about trading or investing in shares with us, or open an account to get started today.
  11. MongiIG
    What to expect and how to trade Nvidia’s upcoming results from a fundamental and technical perspective.
    Source: Bloomberg   Shares Nvidia Nvidia RTX Graphics processing unit Price GeForce 20 series
     Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Wednesday 08 February 2023  When are Nvidia’s results expected?
    Nvidia is set to release its third quarter (Q4) 2022 results on 22 February 2023. The results are for the fiscal quarter ending January 2023.
    What is ‘The Street’s’ expectation for the Q4 results?
    ‘The Street’ expectations for the upcoming results are as follows:
    Revenue of $6,006 billion : -21.42% year on year (YoY)
    Earnings per share (EPS): $0.81 (-61.50% YoY)
    The Nvidia share price is expected to be boosted by the company’s highly anticipated launch of its new RTX 4070 graphics card, its RTX Video Super Resolution being integrated into the next Chrome and Edge browser updates and the launch of its Nvidia GeForce RTX 4090 processor.
    The rumoured launch of Nvidia’s RTX 4070 graphics card in April, which is apparently currently being mass produced, and its new top of the range RTX 4090 mobile GPU, likely set to become the fastest mobile GPU for gaming, should boost Nvidia’s revenues which had been under pressure due to new US trade rules and export limitations introduced in 2022.
    The fact that Chrome 110 on 7 February and also Microsoft Edge will integrate Nvidia’s RTX Video Super Resolution in their latest updates, letting anyone with a GeForce RTX 30 or 40 series GPU experience upscaled video with a noticeable improvement in image quality in both browsers, should also lead to more sales of the company’s chips and positively contribute to its bottom line.
    How to trade Nvidia into the results
    Source: Refinitiv
    Refinitiv data shows a consensus analyst rating of ‘buy’ for Nvidia – 10 strong buy, 19 buy and 13 hold and 1 sell - with the median of estimates suggesting a long-term price target of $200.00 for the share, roughly 11% lower than the current price (as of 8 February 2023).
    Source: IG
    IG sentiment data shows that 80% of clients with open positions on the share (as of 8 February 2023) expect the price to rise over the near term, while 20% of clients expect the price to fall whereas trading activity over this week and month showed 52% of sells.
    Nvidia – technical view
    The Nvidia share price has been rising by close to 55% since the beginning of the year and did so for six consecutive weeks with the share trading above the $192.74 to $208.90 key resistance area since last week, confirming that a long-term bottom has been formed.
    The resistance zone, now because of inverse polarity support zone, is made up of the October 2021, January-to-March 2022 lows and the May and August 2022 highs.
    Source: Tradingview
    The Nvidia share is about to reach its $230.43 August 2021 peak and the April 2022 price gap at $227.77 to $230.62, above which lurk the February 2022 high at $269.25 and the March 2022 peak at $289.46.
    An immediate upside bias will remain in play while this week’s low at $207.86 underpins on a daily chart closing basis and the share remains within its six-week uptrend channel.
    The short-term 2023 uptrend will stay intact while the second to last reaction low, made on the 31st of January at $189.50, underpins on a daily chart closing basis.
    Only a drop through $189.50 would probably spell the end of the October-to-February uptrend and could lead to swift slide back towards the 200-day simple moving average (SMA) at $161.70 taking place.
    Source: Tradingview
    Were the 200-day simple moving average (SMA) at $161.70 to be slipped through, however, the $108.13 October trough would be back in the picture, together with the minor psychological $100 mark, and the March 2020 pandemic low at $89.00.
    Summary
    Nvidia is set to release Q4 2022 results on 22 February 2023.
    Q4 2022 results are expected to show a 21.42% YoY decrease in revenue and a 61.50% decrease in EPS.
    Revenue is expected to be boosted by the company’s new graphics cards and video upscaling software which will feature in future Chrome and Edge browser updates.
    Long-term broker consensus suggests the share to currently be a ‘buy’, with a median price target of $200.00, roughly 11% lower than the current price.
    80% of IG’s clients with open positions are long the share but trading activity this week and month shows 52% of sells.
    The Nvidia share price has been rising by around 55% in six straight weeks since the beginning of the year and remains within a medium-term uptrend, provided that the late January low at $189.50 underpins.
  12. MongiIG
    Implied volatility, synonymous with expected volatility, is a variable that shows the degree of movement expected for a given market or security. Often labeled as IV for short, implied volatility quantifies the anticipated magnitude, or size, of a move in an underlying asset.

    WHAT IS IMPLIED VOLATILITY?
    Implied volatility is a number displayed in percentage terms reflecting the level of uncertainty, or risk, perceived by traders. IV readings, which are derived from the Black-Scholes options pricing model, can indicate the degree of variation expected for a particular equity index, stock, commodity, or major currency pair over a stated period of time.

    For instance, the popular VIX Index is simply the 30-day implied volatility reading for the S&P 500. A high VIX level (i.e. percent), or high implied volatility reading, indicates that risk is relatively elevated and there is a greater chance of larger than normal price swings.
    IMPLIED VOLATILITY VS HISTORICAL VOLATILITY – WHAT IS THE DIFFERENCE?
    Implied volatility is the expected size of a future price change. Implied volatility broadly reflects how big or small of a move is anticipated to be over a particular time frame. On the other hand, historical volatility, or realized volatility, indicates the actual size of a previous price change. Historical volatility illustrates the overall level of market activity that has already been observed.
    The average true range (ATR) of an asset or security is an example of an indicator that illustrates historical volatility. Though implied volatility and historical volatility differ slightly in the regard of future expectations versus past observations, the two metrics are closely related and tend to move in similar patterns.
    Implied volatility readings are typically higher when there is a large degree of uncertainty corresponding with potential for market impact – and often surrounds economic data releases or other scheduled risk events like central bank meetings. This can lead to larger price swings and thus can materialize into higher readings of realized volatility. Likewise, when historical volatility remains anchored during calm market conditions, or when perceived risk is relatively subdued, IV tends to be lower.
    IMPLIED VOLATILITY CAN REFLECT MARKET RISK AND UNCERTAINTY
    Implied volatility is a projection of how much market movement is anticipated – regardless of the direction. In other words, implied volatility reflects the expected range of potential outcomes and uncertainty around how high or low an underlying asset might rise or fall.
    High implied volatility indicates there is a greater chance of large price swings expected by traders whereas low implied volatility signals the market expects price movements to be relatively tame. Implied volatility measurements can also help traders gauge market sentiment considering IV broadly depicts the level of perceived uncertainty – or risk.
    IMPLIED VOLATILITY TRADING RANGES CAN INDICATE TECHNICAL SUPPORT AND RESISTANCE LEVELS
    Implied volatility measurements can be incorporated into various trading strategies as well. This is due to their usefulness for identifying potential areas of technical support and resistance. An implied volatility trading range is typically calculated under the assumption that prices will stay contained within a one-standard deviation move. Mathematically, this means that there is a 68% statistical probability that price action will fluctuate within the defined implied volatility trading range over a specified time frame.
    That said, if prices trade at the upper barrier of its pre-defined implied volatility trading range, then there is an 84% statistical probability that prices will gravitate lower and a 16% probability that prices will continue rising. On the other hand, if prices trade at the lower barrier of its pre-defined implied volatility trading range, then there is an 84% statistical probability that prices will drift higher and a 16% probability that prices will continue falling.
    ADVANTAGES OF IMPLIED VOLATILITY AS A FOREX SIGNAL
    Largely owed to the inherent mean-reverting characteristic of major currency pairs, implied volatility trading ranges typically serve as robust forex signals. For example, this EUR/GBP analysis that defined a 24-hour implied volatility trading range for EUR/GBP provided an illustrated example of how these technical barriers can help traders identify possible inflection points and trading opportunities.
    On 14 January 2020, spot EUR/GBP price action was trading at 0.8541 and its implied volatility measurement was clocked at 7.3% for the overnight (i.e. 1-day) options contract. Using these value inputs, and the options-derived trading range formula below, it was estimated that EUR/GBP would fluctuate between implied support of 0.8508 and implied resistance of 0.8574 over the next 24-hours with a 68% statistical probability.
    In other words, the calculated 24-hour trading range reflected a 1-standard deviation implied move of
    +/- 0.0033 from spot, which meant that Euro-Pound volatility was expected to be contained within a 66- pip band around its then-current price of 0.8541 for the 15 January 2020 trading session.
     
    As trading progressed and market activity unfolded, EUR/GBP jumped to an intraday high of 0.8578, but the currency pair closed the 15 January 2020 session at 0.8547 after spot prices pivoted sharply lower. This was driven by an influx of selling pressure that followed a rejection of its implied high technical barrier.
    USING IMPLIED VOLATILITY TO TRADE COMMODITIES, STOCKS, & INDICIES
    In addition to forex, implied volatility gauges can be incorporated into trading strategies for commodities, stocks, and indices. As mentioned above, measures of implied volatility can indicate the market’s overall level of uncertainty. Correspondingly, cross-asset implied volatility benchmarks tend to reflect useful relationships with their respective underlying markets and may provide insight as to where that market might head next.
    Chart created by @RichDvorakFX with TradingView
    Arguably the most popular implied volatility benchmark is the S&P 500 VIX Index. The VIX Index typically rises amid turbulent market conditions and increasing uncertainty, though the ‘fear-gauge’ tends to soar during aggressive selloffs in stocks. In turn, the VIX generally holds a strong inverse relationship with the S&P 500.
    The OVX Index, which reflects 30-day expected crude oil price volatility, provides an example of another commonly cited IV benchmark. Seeing that the price of crude oil and stocks react similarly to deteriorating risk appetite, it is unsurprising that sentiment-linked crude oil frequently maintains a negative correlation with both the VIX and OVX.
    Chart created by @RichDvorakFX with TradingView
    Although this inverse relationship typically observed between an asset’s price and its implied volatility reading serves as a general rule of thumb, that is not always the case and there are certain exceptions. The correlation of price with implied volatility is dynamic, meaning it is constantly changing, which corresponds with a relative strengthening or weakening from their historical relationship.
     
    Similarly, when it comes to common safe-haven assets, a direct relationship between price and implied volatility may show. For instance, the US Dollar Index (DXY) broadly follows the ebb and flow of expected currency volatility (FXVIX). Also, a positive correlation is often reflected by the price of gold and gold volatility (GVZ). These examples help illustrate the valuable insight that implied volatility readings can provide when incorporated into macro approaches and other comprehensive trading strategies.
    Open a demo FX trading account with IG and trade currencies that respond to systemic trends.
    Written by Rich Dvorak, Analyst for DailyFX.com
  13. MongiIG

    The Week Ahead On The Markets

    By MongiIG,


    Market News
    The Week Ahead
    Read about upcoming market-moving events and plan your trading week
        Week commencing 23 August
    Chris Beauchamp's insight
    Flash PMIs from around the globe will provide some insight into the global economy, but the main event will be the Jackson Hole Economic Symposium, at which the Fed is expected to provide more details of its tapering outlook. Corporate data is mostly quiet, with little in the way of big name earnings, as might be expected for the final full week of August. Video
        Economic reports
    Weekly view Monday
    8.15am – 9am – French, German & eurozone mfg & services PMI (August, flash): German mfg PMI to fall to 62.5, eurozone mfg PMI to fall to 62.4 and services PMI to hold at 59.8. Markets to watch: eurozone indices, EUR crosses
    9.30am – UK mfg & services PMI (August, flash): mfg PMI to fall to 58.7 and services PMI to hold at 59.6. Markets to watch: GBP crosses
    1.30pm – US Chicago Fed national activity index (July): index to rise to 0.1. Markets to watch: USD crosses
    2.45pm – US mfg & services PMI (August, flash): mfg PMI to fall to 63. Markets to watch: USD crosses
    3pm – eurozone consumer confidence (August, flash): index to fall to -4.7. Markets to watch: EUR crosses
    3pm – US existing home sales (July): expected to rise 1.5% MoM. Markets to watch: USD crosses
     
    Tuesday
    3pm – US new home sales (July): sales to rise 1% MoM. Markets to watch: USD crosses
    Wednesday
    9am – German IFO business climate index (August): index to fall to 100.4 from 100.8. Markets to watch: EUR crosses
    1.30pm – US durable goods orders (July): orders to fall 0.8% MoM overall, and rise 0.5% excluding transportation. Markets to watch: USD crosses
    3.30pm – US EIA crude oil inventories (w/e 20 August): stockpiles fell by 3.2 million barrels in the preceding week. Markets to watch: Brent, WTI
    Thursday
    Jackson Hole Economic Symposium: speeches from central bankers, including Jerome Powell, will affect currency and stock markets. Markets to watch: global indices & major FX pairs, gold, oil.
    1.30pm – US initial jobless claims (w/e 21 August): claims to fall to 336K. Markets to watch: USD crosses
    Friday
    Jackson Hole symposium continues
    1.30pm – US personal income & spending (July): income to rise 0.2% and spending to rise 0.5%. Markets to watch: USD crosses
      Company announcements
     
     
    Monday
    23 August
    Tuesday
    24 August
    Wednesday
    25 August
    Thursday
    26 August
    Friday
    27 August
    Full-year earnings
     
     
     
     
     
    Half/ Quarterly earnings
     
    John Wood group,
    Best Buy
    Snowflake,
    Salesforce
    Gap,
    HP,
    Dell
     
    Trading update
     
     
     
     
     
     
      Dividends
    FTSE 100: Auto Trader, Land Securities, St James’s Place, Diageo, Mondi, Aviva
    FTSE 250: Ultra Electronics, HICL Infrastructure, Capital & Counties, RHI Magnesita, Drax, 4Imprint, Plus500
     
    Dividends are applied after the close of the previous day’s session for each market. So, for example, the FTSE 100 goes ex-dividend on a Thursday, but the adjustment is applied at the close of the previous day, e.g. Wednesday. The table below shows the days in which the adjustment is applied, not the ex-dividend days.
     
    Index adjustments
      Monday
    23 August Tuesday
    24 August Wednesday
    25 August Thursday
    26 August Friday
    27 August Monday
    30 August FTSE 100    
    7.21       Australia 200 0.3 3.8 (3.8) 3.8   2.9 3.0 Wall Street       1.8 4.6 21.7 US 500 0.02 0.06 0.18 0.15 0.28 0.52 Nasdaq 0.06 0.23 0.27   0.22 0.95 Netherlands 25         0.1 0.14 EU Stocks 50             China H-Shares   11.7       2.2 Singapore Blue Chip             Hong Kong HS50 12.1 25.9       2.7 South Africa 40   17.3         Italy 40             Japan 225         12.5    
     
  14. MongiIG
    CRUDE OIL, WTI, OPEC+, NFPS, TECHNICAL ANALYSIS - TALKING POINTS:
    Crude oil prices aimed lower despite OPEC+ output hike hold. Markets bet US may release more strategic petroleum reserves. WTI eyeing NFPS as positioning data offers a bearish outlook.
     
    Crude oil prices aimed lower over the past 24 hours. This is despite OPEC and its allies, known as OPEC+, deciding to maintain oil output increases at 400k barrels per day for December. This came as a disappointment to the United States, where President Joe Biden has been repeatedly asking the oil-producing cartel to raise output further to support the post-pandemic global economic recovery.
    Markets are forward-looking, and the hesitation from OPEC+ to raise production likely raised speculation that the United States may tap into its strategic petroleum reserves to bring much-needed supply into the market. The White House reiterated later in the day that it will use ‘the full range of tools’ to protect the economy.
    Over the remaining 24 hours, WTI will be closely watching October’s non-farm payrolls print. The world’s largest economy is expected to add 450k jobs versus 194k prior. This is as average hourly earnings continue to grow at 4.9% y/y from 4.6% prior. A strong print could hint at rising growth, opening the door for WTI to reverse higher. But, this may also raise calls for the Biden Administration to release reserves.
    Check out the DailyFX Economic Calendar for more key events!
    CRUDE OIL TECHNICAL ANALYSIS
    WTI crude oil prices broke under a rising trendline from August on the 4-hour chart below. This could hint at further losses to follow. Still, keep a close eye on the 200-period Simple Moving Average (SMA). A breakout below it could be the confirmation for the trendline breakout. That would place the focus on the 38.2% Fibonacci extension at 76.35. Otherwise, a bounce off the SMA may open the door to a retest of the key 84.62 – 85.39 resistance zone.
     
    WTI 4-HOUR CHART

    Chart Created Using TradingView
    OIL SENTIMENT ANALYSIS - BEARISH
    According to IG Client Sentiment (IGCS), about 54% of retail traders are net-long WTI crude oil. Downside exposure has decreased by 16.81% and 20.37% over a daily and weekly basis respectively. We typically take a contrarian view to crowd sentiment. Since most traders are now net-long, it suggests that prices may fall. This bearish-contrarian trading bias is being further underscored by recent shifts in positioning.

    *IGCS chart used from November 4th report
     
    Written by Daniel Dubrovsky, Strategist for DailyFX.com. 5th November 2021.
  15. MongiIG

    The Week Ahead On The Markets

    By MongiIG,


    Market News
    The Week Ahead
    Read about upcoming market-moving events and plan your trading week
        Week commencing 16 August
    Chris Beauchamp's insight
    For economic news it is still a relatively busy week, including gross domestic product (GDP) numbers from Japan and the eurozone, and consumer price index (CPI) for the UK and Japan, and a variety of unemployment figures. In addition, Fed minutes will provide further fuel for the ongoing discussion over inflation and whether it will be a transitory phenomenon or not, a debate enlivened by this week’s CPI and PPI figures in the US. Corporate-wise however it is much quieter, as earnings season in the US really begins to wind down and with few major UK numbers. However, miners BHP and Antofagasta will report numbers, along with housebuilder Persimmon, plus Cisco and NVIDIA in the US. Video
      Economic reports
    Weekly view Monday
    12.50am - Japan GDP (Q2, preliminary): expected to be 0.2% QoQ and 0.7% YoY. Markets to watch: JPY crosses
    3am – China industrial production, retail sales (July): production to rise 7.8% Yoy and sales to rise 11.5% YoY. Markets to watch: China indices, CNH crosses
    1.30pm – US Empire State mfg index (August): index to fall to 35. Markets to watch: USD crosses
     
    Tuesday
    7am – UK employment data: July claimant count to fall to 112,000, while unemployment rate falls to 4.4% from 4.8% for June. Markets to watch: GBP crosses
    10am – eurozone GDP (Q2, second estimate): growth to be 2% QoQ and 13.7% YoY. Markets to watch: EUR crosses
    1.30pm – US retail sales (July): sales to fall 0.2% MoM. Markets to watch: USD crosses
     
    Wednesday
    7am – UK CPI (July): prices to rise 2.6% YoY and 0.5% MoM, and core CPI to rise 2.3%. Markets to watch: GBP crosses
    1.30pm – Canada CPI (July): prices expected to rise 3.1% YoY. Markets to watch: CAD crosses
    1.30pm – US housing starts & building permits (July): starts to rise 1.1% and permits to rise 0.7% MoM. Markets to watch: USD crosses
    3.30pm – US EIA crude oil inventories (w/e 13 August): stockpiles fell by 447,000 barrels last week. Markets to watch: Brent, WTI
    7pm – FOMC minutes: while policy was left unchanged at the last meeting, these will provide a chance to see how the discussion unfolded, especially regarding the economic recovery and changes in inflation. Markets to watch: US indices, USD crosses
     
    Thursday
    2.30am – Australia employment data (July): unemployment rate to rise to 5% from 4.9%. Markets to watch: AUD crosses
    1.30pm – US initial jobless claims (w/e 14 August): claims fell to 375K in the previous week. Markets to watch: USD crosses
     
    Friday
    12.30am – Japan CPI (July): prices to rise 0.1% YoY. Markets to watch: JPY crosses
    7am – UK retail sales (July): sales rose 9.7% YoY in June. Markets to watch: GBP crosses
     
      Company announcements
     
     
    Monday
    16 August
    Tuesday
    17 August
    Wednesday
    18 August
    Thursday
    19 August
    Friday
    20 August
    Full-year earnings
     
    BHP Group
     
     
     
    Half/ Quarterly earnings
     
    Home Depot,
    Walmart
    Persimmon,
    Balfour Beatty,
    Target,
    Nvidia,
    Cisco
     
    Antofagasta
     
    Foot Locker
     
    Trading update
     
     
     
     
     
     
      Dividends
    FTSE 100: Imperial Brands, Ashtead, Pershing Square, GlaxoSmithKline, Anglo American, Schroders, HSBC, Hikma, London Stock Exchange, Abrdn, M&G, Phoenix Group, Prudential
    FTSE 250: Chemring, Dixons Carphone, Rotork, Civitas, ContourGlobal, CLS Holdings, TI Fluid Systems
     
    Dividends are applied after the close of the previous day’s session for each market. So, for example, the FTSE 100 goes ex-dividend on a Thursday, but the adjustment is applied at the close of the previous day, e.g. Wednesday. The table below shows the days in which the adjustment is applied, not the ex-dividend days.
     
    Index adjustments
      Monday
    16 August Tuesday
    17 August Wednesday
    18 August Thursday
    19 August Friday
    20 August Monday
    23 August FTSE 100    
    20.94       Australia 200 15.3 0.1 0.7   2.7 1.3 Wall Street   12.5 12.9   7.0   US 500 0.28 0.84 0.39 0.12 0.40 0.02 Nasdaq 0.13 2.93 0.70     0.06 Netherlands 25       0.14     EU Stocks 50             China H-Shares         1.6   Singapore Blue Chip   0.14 0.11   0.02   Hong Kong HS50 1.8   23.8     12.1 South Africa 40   389.4       0.3 Italy 40             Japan 225            
  16. MongiIG

    How to Read a Candlestick Chart

    By MongiIG,


    Analyst piece
    READING CANDLESTICK CHARTS – TALKING POINTS:
    Candlestick charts differ greatly from the traditional bar chart Traders generally prefer using candlestick charts for day-trading because they offer an enjoyable visual perception of price It’s important to understand the key components of a candle, and what they indicate, to apply candlestick chart analysis to a trading strategy
    WHAT IS A CANDLESTICK CHART?
    A candlestick chart is simply a chart composed of individual candles, which traders use to understand price action. Candlestick price action involves pinpointing where the price opened for a period, where the price closed for a period, as well as the price highs and lows for a specific period.
    Price action can give traders of all financial markets clues to trend and reversals. For example, groups of candlesticks can form patterns which occur throughout forex charts that could indicate reversals or continuation of trends. Candlesticks can also form individual formations which could indicate buy or sell entries in the market.
    The period that each candle depicts depends on the time-frame chosen by the trader. A popular time-frame is the daily time-frame, so the candle will depict the open, close, and high and low for the day. The different components of a candle can help you forecast where the price might go, for instance if a candle closes far below its open it may indicate further price declines.
    BOOST YOUR CHART PATTERNS EXPERTISE WITH OUR INTERACTIVE QUIZ!
    Our Forex Trading Patterns Quiz will test your knowledge of some of the most important trading patterns. Take the test today by clicking on the link and raise your technical analysis game!
    INTERPRETING A CANDLE ON A CANDLESTICK CHART
    The image below represents the design of a typical candlestick. There are three specific points (open, close, wicks) used in the creation of a price candle. The first points to consider are the candles’ open and close prices. These points identify where the price of an asset begins and concludes for a selected period and will construct the body of a candle. Each candle depicts the price movement for a certain period that you choose when you look at the chart. If you are looking at a daily chart each individual candle will display the open, close, upper and lower wick of that day.

    Open price:
    The open price depicts the first price traded during the formation of the new candle. If the price starts to trend upwards the candle will turn green/blue (colors vary depending on chart settings). If the price declines the candle will turn red.
    High Price:
    The top of the upper wick/shadow indicates the highest price traded during the period. If there is no upper wick/shadow it means that the open price or the close price was the highest price traded.
    Low Price:
    The lowest price traded is the either the price at the bottom of the lower wick/shadow and if there is no lower wick/shadow then the lowest price traded is the same as the close price or open price in a bullish candle.
    Close Price:
    The close price is the last price traded during the period of the candle formation. If the close price is below the open price the candle will turn red as a default in most charting packages. If the close price is above the open price the candle will be green/blue (also depends on the chart settings).
    The Wick:
    The next important element of a candlestick is the wick, which is also referred to as a ‘shadow’. These points are vital as they show the extremes in price for a specific charting period. The wicks are quickly identifiable as they are visually thinner than the body of the candlestick. This is where the strength of candlesticks becomes apparent. Candlesticks can help traders keep our eye on market momentum and away from the static of price extremes.
    Direction:
    The direction of the price is indicated by the color of the candlestick. If the price of the candle is closing above the opening price of the candle, then the price is moving upwards and the candle would be green (the color of the candle depends on the chart settings). If the candle is red, then the price closed below the open.
    Range:
    The difference between the highest and lowest price of a candle is its range. You can calculate this by taking the price at the top of the upper wick and subtracting it from the price at the bottom of the lower wick. (Range = highest point – lowest point).
    Having this knowledge of a candle, and what the points indicate, means traders using a candlestick chart have a clear advantage when it comes to distinguishing trendlines, price patterns and Elliot waves.
    Bar Chart vs Candlestick Chart
    As you can see from the image below, candlestick charts offer a distinct advantage over bar charts. Bar charts are not as visual as candle charts and nor are the candle formations or price patterns. Also, the bars on the bar chart make it difficult to visualize which direction the price moved.

    HOW TO READ A CANDLESTICK CHART
    There are various ways to use and read a candlestick chart. Candlestick chart analysis depends on your preferred trading strategy and time-frame. Some strategies attempt to take advantage of candle formations while others attempt to recognize price patterns.
    Interpreting single candle formations
    Individual candlesticks can offer a lot of insight into current market sentiment. Candlesticks like the Hammer, shooting star, and hanging man, offer clues as to changing momentum and potentially where the market prices maytrend.
    As you can see from the image below the Hammer candlestick formation sometimes indicates a reversal in trend. The hammer candle formation has a long lower wick with a small body. Its closing pricing is above its opening price. The intuition behind the hammer formation is simple, price tried to decline but buyers entered the market pushing the price up. It is a bullish signal to enter the market, tighten stop-losses or close out a short position.
    Traders can take advantage of hammer formations by executing a long trade once the hammer candle has closed. Hammer candles are advantageous because traders can implement ‘tight’ stop-losses (stop-losses that risk a small amount of pips). Take-profits should be placed in such a way as to ensure a positive risk-reward ratio. So, the take-profit is larger than the stop-loss.

    Recognizing price patterns in multiple candles
    Candlestick charts help traders recognize price patterns that occur in the charts. By recognizing these price patterns, like the bullish engulfing pattern or triangle patterns you can take advantage of them by using them as entries into or exit signals out the market.
    For example, in the image below we have the bullish engulfing price pattern. The bullish engulfing is a combination of a red candle and a blue candle that ‘engulfs’ the entire red candle. It is an indication that it could be the end of a currency pairs established weakness. A trader would take advantage of this by entering a long position after the blue candle closes. Remember, the price pattern only forms once the second candle closes.
    As with the hammer formation, a trader would place a stop loss below the bullish engulfing pattern, ensuring a tight stop loss. The trader would then set a take-profit. For more forex candlestick charts check our forex candlesticks guide where we go in depth into the advantages of candlestick charts as well as the strategies that can be implemented using them.

    FURTHER TIPS FOR READING CANDLESTICK CHARTS
    When reading candlestick charts, be mindful of:
    The time frames of trading. Classic price patterns. Price action. At DailyFX we offer a range of forecasts on currencies, oil, equities and gold that can aide you in your trading. It is also worth following our webinars where we present on a variety of topics from price-action to fundamentals that may affect the market.
    By David Bradfield, Markets Writer, DailyFX. 23 August 2021
  17. MongiIG
    In this article we review hawkish FOMC meeting minutes and stronger US data and assess where the dollar could be heading next.
    Source: Bloomberg  Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Thursday 25 November 2021 This week’s US data all seems to suggest that interest rates in the world's largest economy are likely to rise sooner than initially expected.
    Federal reserve continuity
    News that Jerome Powell has been re-nominated by President Joe Biden for the Federal Chairperson position, has kicked off gains in the dollar this week. These gains have then been furthered following US inflation and employment data, as well as Federal Open Market Committee (FOMC) meeting minutes.
    Labour improves while inflation soars
    Weekly US jobs data has seen claims moving to their lowest levels in more than 50 years. Core PCE (Personal Consumption Expediture) was reported as having risen by 4.1% year-on-year, a level last seen in February 1991.
    FOMC minutes reveal a more hawkish Fed
    The FOMC meeting minutes allude to a more hawkish Federal Reserve (Fed).
    Various members of the central bank have suggested raising the target range for the Federal Funds Rate sooner (than previously guided). The last Federal Dot Plot released in September by the bank suggested an initial hike in rates by early 2023, although Fed Fund Futures have implied that the next rate hike is more likely be in June 2022, with a 30% probability of a rate hike in March 2022.
    Since the FOMC meeting, inflation has continued to track at multi-decade highs, while the labour market has steadily been improving. This feeds into the Fed’s mandate of price stability and maximum employment. The meeting minutes do suggest that the Fed are now most likely to raise lending rates in June 2022. If elevated energy prices and supply chain disruptions (major inflation drivers) don’t abate, then the probability of a hike in March 2022 is likely to increase further.
    As a result of this week’s news we have seen continued strength in the US dollar, while US Treasury Yields have risen within the week, more notably on the shorter dated end to flatten the yield curve somewhat.
    The Dollar Index: technical view
    Source: ProRealTime  
    Circled blue we see that the US Dollar Index (DXY) has broken above channel resistance. This move highlights an accelerating upward trend with historical resistance at 97.85 a further upside target from the move.
    However, the move higher has moved the DXY into overbought territory. This is not a suggestion to trade against the prevailing uptrend, but simply that we could see either a sideways consolidation or near-term correction before further gains.
    In the event of a pullback, traders looking for long entry might hope for a bullish reversal at one of the support levels labelled on our chart, using a close below the reversal low as a stop-loss indication for the trade.
  18. MongiIG
    USD Price Analysis & News
    Inflation Induced USD Dip to be Faded USD and US Yields to Face Upward Pressure into Jackson Hole
    Yesterday’s inflation report marked a win for team transitory with factors such as used cars peaking. However, while the release prompted a marginal turnaround for the greenback, given Fed members are largely in agreement that the inflation goal for tapering has been met, the focus is on the labour market and thus the inflation report should have little consequence for the direction of the greenback.
    That being said, US yields are only slightly below the pre-CPI high, which is also despite a very strong 10yr auction. As such, heading into the Jackson Hole Symposium, which I believe will be the time at which Chair Powell provides a taper signal well in advance (3-months) of the actual taper, US yields and by extension the USD index can continue higher. Keep in mind, that this recent pullback in the greenback is the first opportunity for dip buyers to enter since the more hawkish than expected Clarida comments and the strong NFP report. In addition to this, Fed Officials from here on in are likely to discuss that the time is nearing for the Fed to taper, maintain upward pressure on yields into JH.
    USD Chart: 30-Minute Timeframe
    Source: Refinitiv
    With FX markets lacking any real direction, it is fair to say the summer lull has most definitely kicked in, encapsulated by EUR/USD 1W vols falling to fresh YTD lows. It is times like that these where market participants who overtrade are better off sitting on the hands as opposed to jumping in a position out of sheer boredom, or better yet, using the downtime to read one of our educational pieces on market psychology.
    Top 10 Trading Myths: Guest Commentary
    EUR/USD 1W Volatility
    Source: Refinitiv
    The economic calendar suggests that the morning lull is set to continue into the US trading session with little in the way of notable data points. That said, sizeable option expiries will be worth keeping an eye given that they can at times magnetise price action.
    Major Option Expiries
    EUR/USD: 1.1700-05 (1.7bln), 1.1775-90 (1.6bln), 1.1795-00 (1.6bln)GBP/USD: 1.3850-60 (785mln)EUR/GBP: 0.8450 (1.1bln), 0.8500 (650mln)USD/CAD: 1.2495-1.2500 (1.6bln)USD/JPY: 110.30-35 (1.4bln)
    Source: Refinitiv, DTCC
     
    Written by Justin McQueen, Strategist, 12th August 2021. DailyFX
     
     
    DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
    DISCLOSURES
  19. MongiIG
    - Reviewed by Nick Cawleu, July 26, 2022
    The London trading session accounts for around 35% of total average forex turnover*, the largest amount relative to its peers. The London forex session also overlaps with the New York session throughout the year.
    Key talking points in this article:
    What time does the London forex market open? Top three things to know about the London trading session What currency pairs are the best to trade? How to trade breakouts during the London session. WHAT TIME DOES THE LONDON FOREX MARKET OPEN?
    The London forex market hours are from 3:00 AM ET to 12:00 PM ET. The London forex market session sees the most forex volume of all the forex market sessions.
    Time in ET.
    OPEN 3:00 AM Close 12:00 PM Overlap with Asia session 3:00 AM – 4:00 AM Overlap with New York session 8:00 AM – 12:00 PM TOP 3 THINGS TO KNOW ABOUT THE LONDON TRADING SESSION
    1. The London session is fast and active
    The slower Tokyo market will lead into the London session, and as prices begin to move from liquidity providers based in the United Kingdom, traders can usually see increases in volatility.
    As prices begin to come in from London, the ‘average hourly move’ on many of the major currency pairs will often increase. Below is analysis on EUR/USD based on the time of day. Notice how much greater these moves are, on average, after the Asian session closes (Asia session closes at 3AM ET-blue dot):

    Support and resistance may be broken much more easily than it would during the Asian session (when volatility is usually lower).
    These concepts are central to the trader’s approach when speculating in the London Session, as traders can look to use this volatility to their advantage by trading breakouts. When trading breakouts, traders are looking for volatile moves that may continue for an extended period of time.
    2. Look out for the overlap
    The ‘overlap’ is when the London and US sessions literally overlap each other (8AM ET to 12PM ET). These are the two largest market centers in the world, and during this four-hour period large and fast moves can be seen during the overlap as a large amount of liquidity enters the market.

    As seen in the image above, the volatility increases to a maximum from 8:00 AM to 12:00 PM ET - when the London forex session overlaps with the New York forex session. To trade the overlap, traders can use a break-out strategy which takes advantage of the increased volatility seen during the overlap.
    3. High liquidity
    The London forex session is one of the most liquid trading sessions. Due to the high volume of buying and selling, major currency pairs can trade at extremely low spreads. Day traders looking to target short moves may be interested in finding trends and breakouts to trade so as to reduce the cost they pay in spread s.
    WHAT CURRENCY PAIRS ARE THE BEST TO TRADE DURING THE LONDON SESSION?
    There are no ‘best’ currency pairs to trade during London forex market hours, but there are currency pairs that will reduce in spread due to the high volume and allow traders cheaper spread costs.
    These currencies include the major currency pairs like EUR/USD, USD/JPY, GBP/USD, and USD/CHF. The major currency pairs trade in extremely high volumes during the London forex session.
    Currency pairs that are most affected by the overlap include the EUR/USD, USD/JPY, GBP/USD due to the inter-bank activities between the United States and Europe/London. If your trading strategy is better suited for volatility, then these are the trading pairs to watch because they will be flooded with liquidity and will move more on average during the overlap.
    HOW TO TRADE BREAKOUTS DURING THE LONDON SESSION
    Trading breakouts during the London session using a London breakout strategy is much the same as trading breakouts during any other time of day, with the addition of the fact that traders may expect an onslaught of liquidity and volatility at the open.
    When traders look to trade breakouts, they are often seeking firm support or resistance to plot their trades.
    The chart below illustrates a rising wedge pattern, a trend line with a resistance level that is eventually broken- a breakout.

    The big benefit of this setup is risk management. Traders can keep stops relatively tight, with their stop-losses trailing close to the trend line. If the support/trend line does break, losses are limited, and if the strategy does prevail it could lead to a positive risk-reward ratio.
    The increase in liquidity during the London session coupled with the increase in volatility makes potential breakouts much more likely.
    LONDON SESSION TRADING STRATEGIES AND TIPS
    Remember, when trading the London open volatility and liquidity rises, so be wary and utilize the appropriate leverage when trading. If you’re new to forex trading, download our Forex for beginners trading guide to get to grips with the basics.
    Like the London forex trading session, the New York session and Asian forex session also have unique characteristics that forex traders should be aware of.
    Key tips:
    Liquidity and volatility increase during the London session. Breakouts could occur more frequently during the London session. Remember to watch for the overlap between the London session and the New York session for increased volatility and liquidity. Bank of International Settlements (BIS) Triennial Report from 2016*
     
     
    Nov 3, 2022 | David Bradfield, Markets Writer. DailyFX
  20. MongiIG
    WHAT IS THE NUMBER ONE MISTAKE TRADERS MAKE?
    Big financial market volatility and growing access for the average person have made active trading very popular, but the influx of new traders has met with mixed success.
    There are certain patterns which may separate profitable traders from those who ultimately lose money. And indeed, there is one particular mistake that in our experience gets repeated time and time again. What is the single most important mistake that led to traders losing money?
    Here is a hint – it has to do with how we as humans relate to winning and losing
    Our own human psychology makes it difficult to navigate financial markets, which are filled with uncertainty and risk, and as a result the most common mistakes traders make have to do with poor risk management strategies.
    Traders are often correct on the direction of a market, but where the problem lies is in how much profit is made when they are right versus how much they lose when wrong.
    Bottom line, traders tend to make less on winning trades than they lose on losing trades.
    Before discussing how to solve this problem, it is a good idea to gain a better understanding of why traders tend to make this mistake in the first place.

    A SIMPLE WAGER – UNDERSTANDING DECISION MAKING VIA WINNING AND LOSING
    We as humans have natural and sometimes illogical tendencies which cloud our decision-making. We will draw on simple yet profound insight which earned a Noble Prize in Economics to illustrate this common shortfall. But first a thought experiment:
    What if I offered you a simple wager based on the classic flip of a coin? Assume it is a fair coin which is equally likely to show “Heads” or “Tails”, and I ask you to guess the result of a single flip.
    If you guess correctly, you win $1,000. Guess incorrectly, and you receive nothing. But to make things interesting, I give you Choice B—a sure $400 gain. Which would you choose?
        EXPECTED RETURN
    Choice A
    50% chance of $1000 & 50% chance of $0
    $500
    Choice B
    $400
    $400
    From a logical perspective, Choice A makes the most sense mathematically as you can expect to make $500 and thus maximize profit. Choice B isn’t wrong per se. With zero risk of loss you could not be faulted for accepting a smaller gain. And it goes without saying you stand the risk of making no profit whatsoever via Choice A—in effect losing the $400 offered in Choice B.
    It should then come as little surprise that similar experiments show most will choose “B”. When it comes to gains, we most often become risk averse and take the certain gain. But what of potential losses?
    Consider a different approach to the thought experiment. Using the same coin, I offer you equal likelihood of a $1,000 loss and $0 in Choice A. Choice B is a certain $400 loss. Which would you choose?
        EXPECTED RETURN
    Choice A
    50% chance of -$1000 & 50% chance of $0
    -$500
    Choice B
    -$400
    -$400
    In this instance, Choice B minimizes losses and thus is the logical choice. And yet similar experiments have shown that most would choose “A”. When it comes to losses, we become ‘risk seeking’. Most avoid risk when it comes to gains yet actively seek risk if it means avoiding a loss.
    A hypothetical coin flip exercise is hardly something to lose sleep over, but this natural human behavior and cognitive dissonance is clearly problematic if it extends to real-life decision making. And, it is indeed this dynamic which helps to explain one of the most common mistakes in trading.
    Losses hurt psychologically far more than gains give pleasure.
    Daniel Kahneman and Amos Tversky published what has been called a “seminal paper in behavioral economics” which showed that humans most often made irrational decisions when faced with potential gains and losses. Their work wasn’t specific to trading but has clear implications for our studies.
    The core concept was simple yet profound: most people make economic decisions not on expected utility but on their attitudes towards winning and losing. It was simply understood that a rational person would make decisions purely based on maximizing gains and minimizing losses, yet this is not the case; and this same inconsistency is seen in the real world with traders…
    We ultimately aim to turn a profit in our trades; but to do so, we must force ourselves to work past our natural emotions and act rationally in our trading decisions.
    If the ultimate goal were to maximize profits and minimize losses, a $500 gain would completely offset a $500 loss.
    This relationship is not linear, however; the illustration below gives us an approximate look at how most might rank their “Pleasure” and “Pain” derived from gains and losses.
    PROSPECT THEORY: LOSSES TYPICALLY HURT FAR MORE THAN GAINS GIVE PLEASURE

    Figure 3. Licensed under CC BY-SA 3.0 via Wikimedia Commons
    The negative feeling experienced from a $500 loss can be substantially more than the positive feeling experienced from a $500 gain, and experiencing both would leave most feeling worse despite causing no monetary loss.
    In practice, we need to find a way to straighten that utility curve—treat equivalent gains and losses as offsetting and thus become purely rational decision-makers. This is nonetheless far easier said than done.

    Figure 4. Licensed under CC BY-SA 3.0 via Wikimedia Commons
    A HIGH WIN PERCENTAGE SHOULD NOT BE THE PRIMARY GOAL
    Your primary goal should be to find trades which give you an edge and present an asymmetrical risk profile.
    This means your primary objective should be to achieve a robust “Risk/Reward” (R/R) ratio, which is simply the ratio of how much you have at risk versus how much you gain. Let’s say you are right about 50% of the time, a reasonable expectation. Your gains and losses need to have at least a 1:1 risk/reward ratio if you stand to at least break even.
    To tilt the math in your favor, a trader making money on roughly 50% of his/her trades needs to aim for a higher unit of reward versus risk, say 1.5:1 or even 2:1 or greater.
    Too many traders get hung up on trying to achieve a high win percentage, which is understandable when you think about the research we looked at earlier regarding loss aversion. And, in your own experiences you almost certainly recognize the fact that you don’t like losing. But from a logical standpoint, it isn’t realistic to expect to be right all the time. Losing is just part of the process, a fact that as a trader you must get comfortable with.
    It is more realistic and beneficial to achieve a 45% win rate with a 2:1 R/R ratio, than it is to be right on 65% of your trade ideas, but with only a 1:2 risk/reward profile. In the short run the gratification of “winning” more often may make you feel good, but over time not netting any gains will lead to frustration. And a frustrated mind will almost certainly lead to more mistakes.
    The following table illustrates the math well. Over the course of a 20 trade sample, you can see clearly how a favorable risk/reward profile coupled with more losers than winners can be more productive than an unfavorable risk/reward profile coupled with a much greater number of winners. The trader making money on 45% of trades with a 2:1 R:R profile comes out ahead, while the trader with the 65% win rate, but making only half as much on winners versus losers, comes out at a slight net-loss.
    Who would you rather be? The trader who ends up positive 7 units but loses more often than they win, or the one who ends up slightly negative but gets the gratification of “being right” more often. The choice appears to be easy.
    USE STOPS AND LIMITS – GOOD MONEY MANAGEMENT
    Humans aren’t machines, and working against our natural biases requires effort. Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading.
    A great way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning. But don’t set them for the sake of setting them to achieve a specific ratio. You will want to still use your analysis to determine where the most logical prices are to place your stops and limit orders. Many traders use technical analysis, which allows them to identify points on the charts that may invalidate (trigger your stop-loss) or validate your trade (trigger the limit order). Determining your exit points ahead of time will help ensure you pursue the proper reward/risk ratio (1:1 or higher) from the outset. Once you set them, don’t touch them. (One exception: you can move your stop in your favor to lock in profits as the market moves in your favour.)
    There will inevitably be times a trade moves against you, triggers your stop loss, and yet ultimately the market reverses in the direction of the trade you were just stopped out of. This can be a frustrating experience, but you have to remember this is a numbers game. Expecting a losing trade to turn in your favor every time exposes you to additional losses, perhaps catastrophic if large enough. To argue against stop losses because they force you to lose is very much self-defeating—this is their very purpose.
    Managing your risk in this way is a part of what many traders call “money management”. It is one thing to be on the right side of the market, but practicing poor money management makes it significantly more difficult to ultimately turn a profit.
     
    GAME PLAN: TYING IT ALL TOGETHER
    Trade with stops and limits set to a reward/risk ratio of 1:1, and preferably higher
    Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is, and again, as we stated previously, you should ideally aim for an even larger risk/reward ratio. Then you can choose the market direction correctly only half the time and still net a positive return in your account.
    The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as the volatility, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 points away from entry, you should have a profit target 40 points or more away to achieve at least a 1:1 R/R ratio. If you have a stop level 500 points away, your profit target should be at least 500 points away.
    To summarize, get comfortable with the fact that losing is part of trading, set stop-losses and limits to define your risk ahead of time, and aim to achieve proper risk/reward ratios when planning out trades.
    DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
     
    Article by Paul Robinson (Strategist), 19 July 2021. DailyFX
  21. MongiIG
    GBP PRICE, NEWS AND ANALYSIS:
    The embattled Chinese property company Evergrande’s main unit, Hengda Real Estate, has said it will make a bond interest payment Thursday after private negotiations with bondholders. That has eased fears of widespread market disruption, and boosted riskier assets such as stocks and currencies like the British Pound, despite concerns that Evergrande could still default on its debts.
     
    GBP/USD STEADIER ON EVERGRANDE NEWS
    GBP/USD is steadier in early European business Wednesday on relief that China’s indebted property developer Evergrande has reached agreement on some interest payments and the People’s Bank of China has injected more money into the country’s banking system.
    The news boosted stock prices and also helped stabilize riskier assets such as the British Pound, which has been losing ground to the US Dollar since Tuesday last week.
    GBP/USD PRICE CHART, FOUR-HOUR TIMEFRAME (JULY 15 – SEPTEMBER 22, 2021)

    Source: IG (You can click on it for a larger image)
    FEDERAL RESERVE POLICY DECISION AHEAD
    Where GBP/USD goes next will depend largely on Wednesday’s decisions on monetary policy by the Federal Reserve. The Fed is expected to signal that it will scale back its asset buying later this year amid growing pressure to increase interest rates in 2022. If such a statement is not forthcoming, USD will likely fall back, benefiting currencies like GBP.
    On the domestic front, GBP might also benefit from news that the UK is exploring joining the US, Mexico, Canada (USMCA) free-trade agreement. Thursday’s announcement by the Bank of England’s monetary policy committee is unlikely to be a market mover as little is expected from it.
    Written by Martin Essex, Analyst, 22 September 2021. DailyFX
  22. MongiIG

    The Week Ahead On The Markets

    By MongiIG,


    Market News
    The Week Ahead
    Read about upcoming market-moving events and plan your trading week
                                Week commencing 20 December
    Chris Beauchamp’s insight
    The next two weeks are, as is usual, quite. Only Nike on 20 December is of note on the corporate front. Meanwhile, US durable goods orders in the first week, and then Chinese PMI data right at the end of the year, provide the only real major economic events to watch.
    Weekly view Monday
    None
    Tuesday
    7am – Germany consumer confidence (January): index to fall to 36. Markets to watch: EUR crosses

    3pm – eurozone consumer confidence (December, flash): expected to fall to -8. Markets to watch: EUR crosses
    Wednesday
    7am – UK GDP (Q3, final): expected to be 6.6% YoY and 1.3% QoQ. Markets to watch: GBP crosses

    1.30pm – US GDP (Q3, final), Chicago Fed index (November): GDP to remain at 5.9% YoY and 2.1% QoQ, Chicago Fed index to fall to 0.5. Markets to watch: USD crosses
    3pm – US existing home sales (November), consumer confidence: sales forecast to fall 2.7% MoM, confidence to rise to 112. Markets to watch: USD crosses
    3.30pm – US EIA crude oil inventories (w/e 17 December): stockpiles fell by 4.8 million barrels in the previous week. Markets to watch: Brent, WTI
     
    Thursday
    1.30pm – US PCE price index (November), durable goods orders (November), initial jobless claims (w/e 18 December): PCE price index to rise 5.5% YoY and 0.4% MoM, goods orders to rise 1.5% and claims to fall to 204K Markets to watch: US indices, USD crosses
    3pm – US new home sales (November): sales to rise 3.4% MoM. Markets to watch: USD crosses
    11.30pm – Japan CPI (November): prices to rise 0.4% YoY and 0.3% MoM. Markets to watch: JPY crosses
     
    Friday
    Christmas Eve – UK markets close at 12pm
    US markets closed
     
      Company announcements
     
    Monday
    20 December
    Tuesday
    21 December
    Wednesday
    22 December
    Thursday
    23 December
    Friday
    24 December
    Full-year earnings      
        Half/ Quarterly earnings  
    Micron Technology,
    Nike General Mills       Trading update  
               
      Dividends
    FTSE 100: British American Tobacco, Halma, Evraz
    FTSE 250: Mercantile Inv. Trust, IntegraFin
     
    Dividends are applied after the close of the previous day’s session for each market. So, for example, the FTSE 100 goes ex-dividend on a Thursday, but the adjustment is applied at the close of the previous day, e.g. Wednesday. The table below shows the days in which the adjustment is applied, not the ex-dividend days.
  23. MongiIG
    Nearly two years into the Covid-19 pandemic, reported daily infections are rising again as the omicron variant spreads rapidly around the world, in countries ranging from the U.S. and the U.K. to South Africa and Australia.
    The World Health Organization labeled omicron a variant of concern. While much remains unknown about it, the WHO warned that the variant is spreading “significantly faster” than the delta strain and could change the course of the pandemic.
      Still, “2022 must be the end of the Covid-19 pandemic,” Tedros Adhanom Ghebreyesus, WHO director-general, said Wednesday.  
    Data on the pandemic — such as confirmed cases, hospitalizations and deaths — likely underestimates the actual situation owing to limited testing, frequency of reporting and quality of data collected.
    But based on available data, here are four charts that show the state of the Covid pandemic as 2021 comes to an end.
    Omicron is gaining dominance
    The omicron variant has been found in around 100 countries, said the WHO. The agency added that the number of Covid cases involving omicron is doubling every 1.5 to three days.
    The fast-spreading variant, which was first detected by South African scientists, has become the dominant Covid strain in the U.S. and parts of Europe such as England and Scotland.
      Omicron emerged at a time when many countries had relaxed or were easing restrictions. The rise in the number of reported infections has led some countries, including the Netherlands, Denmark and Ireland, to tighten measures to curb the variant’s spread.
    Cases are up, but deaths are down
    The omicron variant triggered a new wave of infections globally. In Africa, daily confirmed cases jumped from a seven-day moving average of around 3.14 per million people at the start of November to 26.67 per million on Tuesday, according to an analysis by online repository Our World in Data.
    Over the same period, the U.K.’s daily confirmed cases rose from a seven-day moving average of 603.38 per million people to around 1,280 per million people — a record high since the pandemic began, the analysis showed.
    Hospitalizations among infected people have also risen in several countries. The U.S., France and South Africa were among those that recorded a rise in weekly hospital admissions over the past month because of Covid-19, according to official statistics compiled by Our World in Data.
    But the average number of confirmed daily Covid deaths has been trending downward globally, an analysis by Our World in Data showed.
    Scientists are still studying the severity of infection caused by the omicron variant compared with previous Covid strains.
    Benjamin Cowling, an epidemiology professor at The University of Hong Kong’s School of Public Health, said omicron seems to cause “about the same severity” as delta and other variants.  
    “But if you’ve been vaccinated, if you’ve had an infection before, you’ve got some protection particularly against severe disease. And that means that omicron in reality looks milder,” Cowling told CNBC’s “Squawk Box Asia” on Monday.
    “It looks like a milder infection because of the immunity that we’ve built up, not because the virus is particularly different in terms of its natural innate severity,” he added.
    Vaccine inequality
    The threat of omicron — and future variants — has highlighted the importance of vaccination in preventing severe disease, said experts. But the distribution of Covid vaccines has remained unequal.
    In more than 30 countries, under 10% of the population has been fully vaccinated, according to figures compiled by Our World in Data. Many of those countries are low-income nations in Africa, the data showed.
    On the other hand, high-income countries are far ahead in vaccinating their people and rolling out booster shots, according to the data.  
    That gap could narrow over time with billions of doses of vaccines produced each year, said Jerome Kim, director general of the International Vaccine Institute.
    “We need to use the vaccines as best we can, we need to use boosters if those are indicated,” Kim told CNBC’s “Street Signs Asia” earlier this month.  
    “And then we need to use other methods including masks, distance and avoiding crowds and hygiene in order to reduce the total infection burden within a country.”
    WHO’s Tedros said that to end the pandemic in the coming year, every country must vaccinate 70% of its population by the middle of 2022.
    CNBC Health & Science
  24. MongiIG
    Tritax Big Box REIT, The Renewables Infrastructure Group, Centamin, and Dr Martens could be some of the best FTSE 250 stocks to watch as recessionary fears take hold.
    Source: Bloomberg   Forex Shares Commodities Tax Gold Recession  
     Charles Archer | Financial Writer, London | Publication date: Thursday 24 November 2022  November’s best FTSE 250 shares to watch were relatively successful. Highlighted as Darktrace, easyJet, and Safestore Holdings, the companies have risen by 11%, 27%, and 10% respectively over the past month.
    But as the UK heads into winter, the complicating factors concerning UK investment have only amplified. The Hunt-Sunak budget has calmed the markets — with the pound now up to $1.21 — but at the expense of tax rises and spending cuts which could well worsen an already difficult economic situation.
    CPI inflation, already at 10.1%, is likely to increase further in April as the domestic energy price guarantee increases to £3,000 per household.
    The Bank of England base rate now stands at 3%, and further rises to above 4% are baked into market expectations. Governor Andrew Bailey has upped his UK recession forecast to two years, and only expects growth to return by mid-2024. And this ‘very challenging outlook’ could well drive unemployment to 6.5% as the country suffers from the longest recession in a century.
    However, there is still room for optimism for some of the best FTSE 250 shares. December is a case of searching for high-quality companies that may have overcorrected amid the fear-laden environment.
    Share price falls in these companies have occurred for a variety of reasons: concerns that the UK recession may morph into global economic depression, an uncertain or unsavoury tax environment, the unpredictability of gold prices in the face of a wavering Federal Reserve, or even prosaic dampened consumer spending.
    But most importantly, the best FTSE 250 stocks are often at their best value in times when economic stress and psychological fear are elevated.
    Best FTSE 250 shares
    1. Tritax Big Box REIT (LON: BBOX)
    Tritax shares have fallen by 39% year-to-date, both over wider recessionary fears and specific concerns over falling real estate prices. However, its 13% rise to 132p over the past month could signal an overcorrection, despite the expectation that BBOX will post smaller profits throughout the recession.
    The real estate investment trust has suffered from a pop in the ‘warehouse’ bubble, beginning earlier this year when major client Amazon warned it had overexpanded its warehousing needs and was looking to dispose of some space.
    But Tritax’s share price is now far from its net asset value, and it has no asset vacancies. It also holds ESG points as one of the greenest REITs in the UK.
    Further, the FTSE 250 stock has paid out reliable dividends for years by virtue of its REIT status, and this dividend income could rise over the longer term. This is because leasing demand is likely to rise, as e-commerce becomes ever more important compared to high street shopping, and companies choose certainty having experienced the dangers of the just-in-time model.
    Source: Bloomberg 2. The Renewables Infrastructure Group (LON: TRIG)
    TRIG shares crashed to a one-year low of 118p on 11 October but has now recovered to 131p, a shade below its estimated net asset value of 134.3p.
    The FTSE 250 company invests predominantly in wind farms, solar power, and battery storage. 60% of its assets are operating within the UK, and the remaining 40% within Europe, giving it exposure to five different energy markets.
    The obvious headwind is the new Energy Generator Levy, which has reduced TRIG’s per-share net asset value by 8.3p. The levy will be set at 45% of ‘extraordinary returns from low-carbon UK electricity generation,' in addition to 25% corporation tax, for an effective 70% rate.
    While the EU revenue cap mechanism is deductible, there is no doubt that this levy is damaging TRIG’s attractiveness to investors. However, the long-term scope for profits means a small rise next month may be in the offing.
    3. Centamin (LON: CEY)
    Centamin shares fell to 74p on 15 July but have now surged by 19% to 106p year-to-date. With gold prices still at near record highs amid a slightly more dovish Federal Reserve, Centamin may be soaring to new heights in the near future.
    The gold company’s key asset is its Sukari mine in Egypt. Excitingly, an independent study conducted by EnTech has found that operations at the country’s largest gold mine can be further expanded to 1.5 million tonnes per annum of total ore mined. This is at the upper end of the previously indicated range and represents a huge 31% increase in ore mining rates.
    With a $154 million cash balance and healthy 6.1% dividend yield, Berenberg Bank has set a 123p target for the gold miner, representing a healthy potential upside.
    4. Dr Martens (LON: DOCS)
    Dr Martens shares have more than halved in value since the start of the year, falling by 27% today alone to 210p after releasing worse-than-expected interim results.
    The iconic boot manufacturer has warned investors that the next few months will see weakened trading, including weaker demand over Christmas as consumers rein in spending over reduced discretionary income amid the soaring cost-of-living crisis. Increased internal investment and the strength of the US Dollar have also hit margins.
    However, context is important, and the correction may now have gone too far. Revenue increased by 13%, despite profit before tax falling to $57.9 million. And the brand profile is exceptionally strong, likened in the footwear world to the economic moats enjoyed by Coca-Cola and Apple.
    With the expectation of a poor quarter now baked in, the opportunity to scoop up shares ‘on sale’ may be hard for some to resist.
    Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK’s No.1 trading provider.*
    Learn more about trading or investing in shares with us, or open an account to get started today.
  25. MongiIG

    Introduction to Multi-Time Frame Analysis

    By MongiIG,


    Analyst piece
    AN INTRODUCTION TO MULTI-TIME FRAME ANALYSIS
    Multi-time frame analysis (also known as multiple time frame analysis) allows traders to focus on the appropriate timing of trades as well as help identify when trends may be reaching exhaustion. This article will explain how to utilize this methodology with the forex pair EUR/AUD.
    BENEFITS OF MULTI-TIMEFRAME ANALYSIS
    As explored in previous articles on trendlines and pitchforks / median-lines are used to locate key reaction zones in price. These same principles can be applied to multiple time frames to offer a more complete view of current market trends.
     
    The idea is to, ‘see the forest through the trees’ – in other words, before entering a trade based on a given setup, you will always want to have a broader opinion of where the market is relative to trend. By viewing price action in various timeframes we can identify possible entry points within a given price advance / decline as well as help in timing these moves.
    EURAUD DAILY

    Consider the EURAUD daily chart above- The pair was trading in a clear downtrend off the 2015 highs with a descending channel formation highlighting support into the April lows around 1.3678. As discussed in earlier lessons, the confluence of trendlines & key high / lows in price will often represent more significant areas of support & resistance. In this example, price is testing down-trend support – the focus now shifts to the near-term picture for further clarity on how we would trade this possible rebound.

    Just because price is at support, doesn’t mean we can simply assume it will hold. Prices need to establish some form of behavioral change before we can look to trade against the broader trend. As we drill down into the 4-hour chart, an embeddednear-term descending channel formation can be identified (red). A break above channel resistance as price comes off key support would shift the near-term focus higher in the pair and will serve as our ‘trigger’ to get into the trade.

    To identify our topside targets, we can derive an ascending pitchfork formation off the most recent low-high-low to construct an up-slope. The initial target on such a trade would be at the median-line (bisector) of the pattern with the focus weighted to the topside while above the lower median-line parallel.

    Fast forward a few weeks and the pair indeed broke above down-channel resistance and came back to test that line as support (long-entry). The advance continued into the median-line followed by a break and rally into the upper median-line parallel a few days later. This simple example illustrates how analyzing price action through various lenses of time can help identifying trading opportunities within the context of a larger trend (also called primary trend). Oftentimes secondary (or even tertiary) trends within these patterns will offer near-term setups to trade against the primary trend.
    KEY TAKEAWAYS ON MULIT-TIMEFRAME ANALYSIS
    Some important aspects to keep in mind when utilizing multi-timeframe analysis
    Too many time frames render useless – Some fall into the pitfall of trying to time entry/exit when all the time frames line up with a signal- but this will rarely happen. When scaling down in time-frames, utilize a ratio of 1:4 to 1:6 between the trigger and the trend timeframes. For example, if you are taking a trade off the four-hour chart, look for the daily chart for trend analysis. If you are looking for a trade off the one-hour- look at the four-hour for trend analysis. Recognize when you’re counter-trend trading – Often times the near-term picture will offer setups against the primary trend like the EURAUD example above. It’s important to approach these trades with more caution, meaning lower leverage and more conservative stops. Multi-timeframe analysis allows traders to focus on the appropriate timing of trades as well as help identify when trends may be reaching exhaustion. In the example above, if the EURAUD had stayed within the confines of the near-term descending channel formation, no attempts would have been made on the long-side. With the same respect, had we not viewed the trade within the context of the broader trend highlighted on the daily chart, we may have missed the turn all together. Keeping that in mind, always trade within the context of the primary trend and look for near-term price action to offer triggers in time and price.
     
    By Michael Boutros, Strategist, 5th November 2021. DailyFX

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